McLeod Russel India's statutory auditors gave an adverse opinion on the tea producer's FY26 results, saying they could not confirm the recovery of loans made to its promoter group.

Lodha & Co LLP said the results were not fairly presented in all material respects because of unresolved questions over roughly Rs 2,860.50 crore in inter-corporate deposits owed by group companies, of which about Rs 414.21 crore remains unprovided for despite doubts about repayment. The auditors flagged a material uncertainty over the company's ability to continue as a going concern, though the results were prepared on that basis.

The board, meeting May 29, approved a standalone net loss of Rs 90.86 crore for the year ended March 31, 2026, narrower than the Rs 196.36 crore loss booked the year before, on revenue from operations of Rs 974.82 crore.

The results land as McLeod Russel presses ahead with a debt restructuring led by the National Asset Reconstruction Company Ltd (NARCL), which holds just over 75% of the company's total lender exposure by value as of December 31, 2025. Under the plan, McLeod Russel's sustainable debt to NARCL is cut to Rs 1,050 crore, due by February 2029, from Rs 2,483.30 crore; the roughly Rs 846.48 crore gap is treated as unsustainable debt, and NARCL is set to take a 10% equity stake, on a fully diluted basis, through a mix of debt conversion and a pledge of promoter shares. A separate one-time settlement with J.C. Flowers Asset Reconstruction, sanctioned May 13, reworks a further Rs 749.66 crore of borrowings, with about Rs 442.47 crore of that written off as unsustainable.

To help fund the settlement, McLeod Russel has signed memorandums of understanding to sell three of its Assam tea estates: Nya Gogra to Bengal Tea & Fabrics Limited for Rs 44.79 crore, Rupajuli to Khona Tea Estate LLP for Rs 16.76 crore, and Boroi to Jatinga Agro-Tech for Rs 27.30 crore. The sales still require due diligence and regulatory approval.

McLeod Russel traces to 1869, when Williamson Magor & Co. was formed to serve Assam's early tea estates. Long run by the Khaitan family and described for years as the world's largest tea-growing company by area, it lost that standing after selling off a large share of its estates between 2019 and 2020 to pay down debt. Williamson Magor & Co. Ltd, McLeod Russel's promoter entity, told stock exchanges on June 3 that none of its shares in the tea company were pledged as of March 31, 2026.

Sources: ScanX, McLeod Russel promoters confirm no share encumbrance in FY26; ScanX, McLeod Russel board to meet on May 29 for FY26 results; Business Standard, McLeod Russel India to sell three Assam tea gardens to repay debt; The Globe and Mail (TipRanks), McLeod Russel publishes audited FY26 results in line with SEBI norms; MarketScreener, McLeod Russel India: Financial Results for the quarter and year ended 31st March 2026.